Complex mesh with armature and mesh deform modifier
Your use of mesh deform is not really warranted here in my opinion. Keep your bones, maybe subdivide them into many smaller bones (in edit mode, "w" -> subdivide). Then, change armature to object mode. Select cylinder, then shift+select armature, ctrl+p, "with automatic weights".

This should give you a nice smooth deformation.

If you are going to use mesh deform, why do you use 2 cubes. It should be one mesh. I think a better explanation of your exact problem may assist in answering in a more detailed fashion.

I will add another note. Maybe a better solution for you is to use shape keys to correct issues after armature deform. There is another method, add object -> lattice. In mesh panel subdivide it more. Then add modifier to your object -> lattice and select the lattice you created as the source. You can parent the lattice to bones just fine.